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Can Kaseya Ever Go Public?

Several MSPmentor readers allege Kaseya can never pursue an initial public offering (IPO) because CEO Gerald Blackie (pictured) had a previous run-in with the U.S. Securities and Exchange Commission (SEC). In order to address -- and eliminate -- the rumors, a Kaseya spokesman sent MSPmentor a comprehensive statement. Take a look.

First, the short version of Kaseya's response. According to a Kaseya spokesman:

No criminal complaint was ever filed against Blackie.

Blackie never knowingly defrauded anyone: not the employees of Platinum (his previous employer) nor its public investors.

Without admitting any wrongdoing, in May 1996 Blackie reached a settlement in a civil action filed by the SEC.

Kaseya is fully capable of going public, with or without Blackie as CEO.

Try not to read too much into that last line about Blackie's status as CEO. The spokesman, I believe, was simply making the case that no single person controls Kaseya's destiny. However, I have a feeling Blackie will remain with Kaseya for years to come.

Kaseya's Complete Statement

Now, here's a look at the complete statement from Kaseya:

"Here are the facts according to the SEC: Without admitting any wrongdoing, in May of 1996 Blackie reached a settlement in a civil action filed by the SEC, requiring him to pay a fine, return proceeds of stock sales to Platinum Software that occurred during the accounting restatement period and to agree not to be an officer or director of a public company for 10 years.

The settlement was a result of a complex and technical alleged violation of the securities laws stemming from the simple pre-programmed sales of small amounts of stock once a quarter. This creates the capacity for the government to allege insider trading in such cases where, for example, a restatement of revenues is necessary. It must be said that in the case of Platinum, these were re-categorizations of the financials; revenue to deferred revenue, for example.

Mr. Blackie felt that it was easier to settle with the SEC than to spend five years in the courts trying to clear his name since the outside directors, then running the company, were quite happy to make Blackie the villain. The settlement agreement with the SEC has since expired. No criminal complaint was ever filed. Kaseya is fully capable of going public, with or without Blackie as CEO.

Mr. Blackie never knowingly defrauded anyone: not the employees of Platinum nor its public investors. It was Blackie himself who asked for an investigation into whether proper accounting procedures had been followed. During the period in which there were revenue recognition issues, he sold less than 3% of his stock. Platinum software had won several industry awards and was widely regarded as being the best in its class. However, the company was growing at a frenetic pace, with undoubtedly too many moving parts, and Mr. Blackie admits to having been a young, naïve CEO, ill-equipped to navigate that kind of crisis, and who was subsequently taken advantage of by the very outside board members who were asked to conduct the independent investigation. The events at issue in the settlement all took place back in the early 90's, more than 15 years ago. Mr. Blackie has remained in compliance with his obligations to that SEC settlement."

How the Chatter Started

Rumors about Blackie's status with the SEC started in June 2008, when MSPmentor posted a story about Kaseya's decision to remain privately held. Several reader comments -- posted over a series of weeks and months -- alleged that Blackie had problems with the SEC that would prevent him from running a public company. Clearly, Kaseya claims otherwise.